Australian SMEs ignore the web and social media at their peril.
As outlined in SmartCompany this week, just half of Australian small and medium-sized businesses have a website, despite international studies showing companies with a “high web presence” have higher revenue growth and generate more jobs.
Global marketing expert Professor Wagner Kamakura says there are plenty of ways for companies to create buzz about their products, without a massive advertising spend.
Kamakura, a researcher and teacher at the Duke University Fuqua School of Business in the US, revealed these key insights to SmartCompany:
“Use consumers to become your advocates,” Kamakura says. “Regular advertising, you pay for it; social media, you pray for it.”
“Social media, if you play it right, you put a seed in and consumers will take care of spreading the word.”
Kamakura says although there’s still a place for mainstream media and advertising, smart companies go straight to the “market mavens” such as bloggers and prolific tweeters, who are not only generally cheaper, but trusted by their audience.
Now serving as the Ford Motor Company Professor of Global Marketing at Duke University, Kamakura delves into Ford’s ways of reintroducing a car that was known as a lemon in the US, but was popular in Europe.
“They wanted to reach young consumers so they identified opinion makers, invited those people to a location, gave them a car to drive for a while and created a lot of incentives for those people to blog about it, for example, trips to visit celebrities.”
“By doing that, they were able to create a tremendous amount of buzz about the car, which was much more effective than actually spending millions of dollars on TV advertising. If they spend millions of dollars on TV advertising, they’re going to reach a lot of people who are not interested.”
Yes, there are traditional campaigns that are huge, such as the award-winning Volkswagen ads featuring a pint-sized Darth Vader.
But Kamakura says interesting ads create more buzz by being on YouTube, rather than through big bucks spent on traditional broadcasting.
Kamakura draws attention to Shoes of Prey, one of SmartCompany’s 2011 hot 30 under 30 companies, which allows people to design their own shoes for a price similar to store-owned shoes.
Giving customers a sense of pride – that “I did it” moment – can boost a company’s bottom line, as well as consumers’ bragging opportunities.
Discounting has been the norm for Australian retailers for some time, but Kamakura says a better away is to encourage consumers to compete among themselves for their products, rather than make pricing part of the reason to buy.
A prime example is Apple: there’s so much buzz about their products, and a feeling of scarcity, that customers don’t really think about how much the products cost.
A self-confessed analytics buff, Kamakura is studying wine reviews at the moment, pulling out key words to separate what a review says about the reviewer and what it actually says about the wine.
Extracting the reviewers’ preferences and writing idiosyncrasies, it’s hoped an ‘impartial’ view of the wine can be formed – one that isn’t framed by the producer but produced by the consumer, and an influential one at that.
As Kamakura puts it, market research is not only contrived but it allows the company to set the terms of reference. Free-ranging commentary and reviews better allow companies to get a ‘pure’ reading of their reputation.
Kamakura has studied consumer spending over three recessions in the US and identified three main effects: it lifts the unemployment rate; it reduces incomes so spending is limited to the essentials; and it reduces discretionary spending, particularly on luxury items. It’s that fall in ‘comparative spending’ that has premium companies reeling.
As he explains it, just as people allow themselves to spend more on discretionary goods when times are good – ‘keeping up with the Joneses’ – comparative consumption suffers when the economy sours.
“There are several products people consume not because of the value they get from consuming them, but for the pleasure of knowing you can do it more than others.”
So if nobody is updating their car or going on fancy holidays, that’s a weaker incentive for others to do so. With much of the developed world’s economy going nowhere, this is a major problem for luxury goods producers.
“The wealthy are globalised,” Kamakura says, adding there’s little difference between the wealthy of Asia or elsewhere.
The message here is that companies targeting what the emerging middle class and lower middle class can afford open themselves up to great new markets.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
Comments